Canadian wholesale sales fall for first time in three months

Canadian wholesale sales fell surprisingly for the first time in three months in December as sales in five of the seven sectors tracked marked declines.

Wholesale sales were down 0.5 per cent to $63 billion in the month - well below economists' forecast of a 0.4 per cent increase.

Sales dropped in five of the seven sectors, which accounts for 65 per cent of total wholesale sales.

The personal and household goods sector saw the biggest decline in dollar terms, down 3.3 per cent to $8.5 billion. That is the lowest level since April 2017.

Five of six industries in the households goods sector reported declines in December, led by the home entertainment equipment and household appliance industry, said Statistics Canada. 

The lone bright spot in the report was the construction sector with machinery, equipment and supplies sales up 2.3 per cent, while building materials and supplies grew 2.7 per cent.

'Soft' data

Robert Kavcic, economist at BMO Capital Markets said sales volumes were notably down at 0.9 per cent in the month, which adds to a soft manufacturing report.

"We now wait for retail on Thursday," he said. "So far, it looks like GDP will be pretty sluggish in December, and the fourth quarter will do well to hit our forecast of 2.2 per cent."

Manufacturing data released on Friday showed that sales were down 0.3 per cent in December after a revised increase of 3.8 per cent in November.​

Michael Dolega, economist at TD Economics said that while the decline in wholesale trade volumes was disappointing, the impact on economic growth in the fourth quarter was "relatively limited" at 0.1 percentage points.

"We're still tracking around two per cent for the quarter," he said. "The figure also impacts first quarter expectations given the weaker hand-off."

Retail sales data on Thursday, followed by inflation statistics on Friday is expected to provide a clearer picture of how the economy fared at the end of last year.